Your benefits: What you don’t know can hurt you?

Federal and postal workers have one of the best benefits packages in the nation. Also one of the most complicated.

The fast-dwindling number of workers who are covered by the old Civil Service Retirement System have it relatively easy. Depending on how long they work, they get starting annuities that are generally more generous than the few remaining private-sector pension plans. The benefits are indexed to inflation. CSRS employees can invest in the Thrift Savings Plan and most do. But they don’t get the 5 percent match available to workers under the Federal Employees Retirement System that replaced CSRS in the mid-’80s. Investing in the TSP is a nice option for CSRS employees. It is a must for those under the less-generous FERS program because it will provide anywhere from one-third to one-half of all the money they receive in retirement. The monthly FERS retirement benefit is less generous than the CSRS benefit. And FERS employees get partial cost-of-living adjustments that don’t kick in until they are age 62.

Many federal agencies provide benefits seminars for their employees. They bring in outside experts who talk about pay, retirement, life and health insurance, Social Security, long-term care, etc.

Unfortunately, many agencies limit the seminars to workers (sometimes spouses) who are within five years of retirement. Lots of people think the information should be provided much earlier in a career. They feel that if young feds knew what a relatively good deal Uncle Sam offers, turnover would be reduced. More of the best and brightest would stay.

There are two things that the outsiders who conduct the seminars say about their audiences.

  1. That many, maybe most, folks in the audiences are incredibly smart. The jobs they have are often interesting. Nearly always essential. Imagine the crowd you would be addressing at the State Department, National Security Agency, CIA, NASA, the Federal Reserve the Nuclear Regulatory Commission or the National Institutes of Health. Some pretty sharp folks with some fascinating, sometimes hair-curling jobs.
  2. Some of them, often high-grade workers and members of the scientific and technical communities are brilliant. About a lot of things, including their specialties. But when it comes to knowing their benefits package, some of these eggheads (sharp as they are) couldn’t find their buttocks with two hands. And a map. Most presenters say that at almost every session they conduct, one or more employees expresses surprise that they are entitled to a government benefit (pension). Or how their Social Security benefit will work. Or what it will be.

Knowing what’s in your benefits is of high importance. For both FERS and CSRS employees, knowing what you will get in retirement can better help you decide what kind of TSP investor you should be. Should you be conservative and hunker down in the super-safe, super-dull Treasury securities G fund? Or should long-haul investors (with a guaranteed pension) be more aggressive by investing in stocks (C,S and I) where performance is sometimes a roller coaster, but generally a better payoff?

One of the people who knows your benefits package from A to Z is Tammy Flanagan. She’s been visiting federal agencies for years and she writes a regular column for Government Executive. And she wrote the cover story for this month’s NARFE magazine. The theme is what you don’t know can hurt you. Tammy will be our guest today on Your Turn. And we’ll cover the benefits waterfront. Listen if you can and tell a friend. If you can’t listen today (10.a.m. EDT) the show will be archived on our Your Turn page along with previous shows. Please listen, tell a friend, and learn. What you do know, or will learn, could make your golden years 24 karat instead of gold plate.

Nearly Useless Factoid

By Michael O’Connell

In the 1979 movie Alien, the blue laser lights that were used to light the alien ship’s egg chamber were borrowed from The Who.

Source: IMDB